Housing Strategy

Lord Lilley Excerpts

Wednesday 24th March 2021 Grand Committee

[Lord Lilley (Con)]

My Lords, I congratulate the most reverend Primates the Archbishops on their report on the housing shortage and I particularly congratulate the most reverend Primate the Archbishop of Canterbury on the way he introduced it today. I welcome the report, first, because it recognises and highlights the importance of the housing crisis in this country. It is amazing how little attention is given to this problem, yet in my experience nearly all the social problems and many of the economic problems we face in this country are caused or aggravated by the shortage of housing. I fear it does not receive the attention it deserves because most of us in the chattering classes already own our own homes and subconsciously, or consciously, enjoy their rising value as demand outstrips supply and prices go up. The most reverend Primate’s reminder about where our true wealth lives is well made.

The second reason I welcome this report is because it urges the Church and Christians to lead by example by using Church land to build more homes. However, there is one thing that puzzles me about its conclusions and about the remarks the most reverend Primate made today.

The report advocates that housing should be sustainable, safe, stable, sociable and satisfying—jolly good things—but, despite its willingness to build more homes, increasing the supply of homes does not figure in the report’s alliterative list of priorities. I suggest that the word “sufficient” should be added, and that it be at the top of the list, because the only way to alleviate the housing shortage is to build more homes.

When I made this point in a speech in the Commons in 2014, it generated a headline in my local newspaper. For once, the headline was an entirely accurate precis of my speech: “MP says solution to housing shortage is build more homes”. Uncontentious, I thought, but what astonished me was the number of people who wrote to me and to the newspaper denouncing this assertion as ridiculous. Surely, they argued, our MP must realise that the housing shortage is the result of house prices, rents, land prices or mortgage interest rates being too high. The solution, they asserted, is for government to control house prices, rent, land prices and interest rates—and anyway, they invariably added, “We certainly don’t need to build any more houses in Hertfordshire”.

I am sure the most reverend Primate, who has worked in industry, knows that high prices, including rents and interest rates—which are prices—are symptoms of a shortage, not its cause. I shall put it very simply: the simple fact is that if you have 25 million dwellings and 26 million households wanting a home, a million of them are going to be disappointed. That is arithmetic. Young people may have to stay longer at home with their parents, others may have to share overcrowded flats with friends, and dwellings may have to be split into smaller units, even though the average size of our homes in this country is far smaller than anywhere else in the developed world. Those with no or low incomes will have to be helped by housing benefit to acquire a roof over their head, which is one reason why the housing benefit bill has been soaring. But every dwelling they occupy means that someone else, a bit higher up the income scale, will have to share or will be forced to occupy overcrowded properties.

We can ration housing by prices, rents and incomes, supplemented by housing benefit, or we can keep prices and rents below the market clearing level, and the Government will then have to allocate the supply of housing according to some assessment of need. In practice, we do a mixture of both, but, either way—however we switch the emphasis between the two—it does not alter the fundamental arithmetic. If there are only 25 million homes and 26 million would-be households, 1 million of them will have to share.

What should be clear is that reducing the rents of some of those 25 million dwellings below the market clearing level will not create a single extra dwelling, though in the long run it will reduce the supply of rented accommodation. Reducing the price of houses below the market level will not add a single home to the housing stock in the short term, though it will reduce the supply of homes in the long term. Reducing mortgage terms below the commercial level will not add a single home, though it will quickly add to demand and drive up prices facing those without access to cheap mortgages, as the Government are about to find out.

There is only one way to alleviate the housing shortage and that is to build more homes. Sadly, the report, and indeed the remarks of the most reverend Primate, were somewhat equivocal about that. On page 80, the report says:

“It is disingenuous to imply that ever higher targets for building new homes will somehow make them more affordable. It won’t and it hasn’t. Adding around 1% to the housing stock each year will not have much, if any, effect on housing prices.”


I am afraid that that statement is disingenuous: of course extra supply will not bring down prices relative to incomes if the demand is rising as fast or faster.

That brings me to my second question about this report. Where in it is the analysis and recognition of the causes of the housing shortage? I found it difficult to extract. Why have house prices in the UK outstripped incomes during the past 20 years, as it spells out? Why are they so much higher relative to incomes than in France, Germany or even Switzerland? There is only one possible answer: that the growth of supply has fallen short of the growth in demand. We have been building far fewer new houses now than was achieved decades ago by Harold Macmillan, and even our target is below the level he achieved.

At least part of the reason for that is nimbyism, the selfish attitude of those who own homes but oppose plans to build homes anywhere near theirs. The document mentions the issue, though only a couple of times. It rightly condemns it, though in rather equivocal terms, saying that

“There may be some good reasons to be a Nimby”


and then saying that there are not really any if you are a Christian. I would rather it to be a more ringing denunciation of nimbyism.

It is possible, though difficult, to overcome nimbyism. I faced it in my own constituency, where, before the 2015 election, a group of people said that if I did not agree to oppose all new housebuilding in the constituency, they would run a candidate against me. They belonged to the Harpenden civic society, which is the 1,000 most important people in Harpenden. I faced them down. I managed to persuade a big public meeting which they held that it was a moral obligation to support building more houses, for the reasons spelled out in this report. The Church will have to be prepared to be pretty robust when it starts building on church land, because it will be faced with nimbyism, but, as I say, it is possible to face it down.

Why has demand outstripped supply? Until 2000, the main factor in increasing demand was the declining size of the average household. It was declining by 0.5% a year, because of people living longer after their kids left home, so that there were only two in the home instead of four or whatever; some elderly people living alone after the death of their spouse; and, sadly, the break-up of marriages. For all those reasons, household size was declining. Actually, it ceased to decline, because people cannot afford to break up with their spouses and leave home early, and children are having to stay with their parents much longer and so on.

That was the main factor, but, in the last couple of decades, another factor has overtaken it: namely, net migration into this country. In recent years, typically 600,000 people have come to live in this country and 300,000 have left. We have had to build houses for the net 300,000 who have come here each year. Since Tony Blair took the locks off immigration, a net 5 million people have come here. We seem reluctant to mention this—it certainly does not get any mention in this report. The ONS says that, over the past decade, over three-quarters of additional new households are headed by someone who was born abroad.

This is an important issue. This is not the place to discuss whether we should have a higher or lower level of immigration, but we can surely agree that anyone who believes that this country should continue to be a destination of mass migration and settlement—which it has never been historically—must not then oppose every proposal for housebuilding in their area. Sadly, I found that it was very often those who criticised any tightening of immigration controls who also opposed every planning application in my constituency. I hope that I will have the Church on my side when I criticise such hypocrisy.